Acting for another – Hong Kong court of final appeal issues important clarification under the prevention of bribery ordinance

In the recent case of HKSAR v Luk Kin Peter Joseph & Yu Oi Kee (FACC 8/2016), the Hong Kong Court of Final Appeal (CFA) clarified the scope of agency in the context of group companies for private sector offences under the Prevention of Bribery Ordinance (POBO).The CFA examined whether an agency relationship existed between directors of a subsidiary as agent and the parent company as principal, and held that for the purpose of section 9 of POBO, an agency relationship can arise without any pre-existing duty (legal, contractual or fiduciary). The mere acceptance of a request to act in relation to the principal’s affairs or business may itself create an agency relationship.

This is an interesting decision for directors, particularly in the context of group companies in Hong Kong. It is common for companies to adopt a group structure whereby the various businesses of the parent company are conducted through its directly-owned and/or indirectly-owned subsidiaries, with different people holding directorships in the parent company and the subsidiaries. The CFA's broad interpretation of "agent" under section 9 of POBO means that directors should be more cautious of whether a duty to act with good faith has been imposed on them with respect to their conduct of affairs related to companies in which they do not hold directorships. Click here to read our e-bulletin on this case.